A federal court in Oklahoma has ruled that the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) bar in section 107(e)(1) to the transfer of CERCLA liability applies to contribution claims brought by third parties, not just to claims brought by the government. Cyprus Amax Minerals Co. v. CBS Operations Inc., No. 11-252 (N.D. Okla. 10/12/12).
CERCLA section 107(e)(1) provides that “no indemnification, hold harmless, or similar agreement or conveyance shall be effective to transfer from the owner or operator of any vessel or facility or from any person who may be liable for a release or threat of release under this section, to any other person the liability imposed under this section.” It also states that “nothing in this subsection shall bar any agreement to insure, hold harmless, or indemnify a party to such agreement for any liability under this section.” Several courts have pointed out the apparent conflict between the two sentences, but the majority has interpreted the provision to allow apportionment of CERCLA liability under indemnification agreements while barring transfer of the underlying liability. Harley-Davidson, Inc. v. Minstar, Inc., 41 F.3d 341 (7th Cir. 1994); United States v. Hardage, 985 F.2d 1427 (10th Cir. 1993).
In this case, plaintiff argued that CERCLA liability was transferred to defendant under a 1996 bill of sale. Defendant argued that, as a matter of law, statutory liability under CERCLA may not be transferred, and therefore defendant could not have assumed direct liability under CERCLA. Plaintiff countered that the bar on transfer of CERCLA liability applies only vis-à-vis the government and not where contribution claims are brought between and among third parties. The court rejected plaintiff’s argument, ruling that, while the government generally seeks to enforce the statute, the provision applies to third parties as well.